Land banks: A lesson from history

At the recent annual meetings of the World Bank and the International Monetary Fund, I was struck by the fact that every time a development-related issue was discussed — infrastructure, rehabilitation, resilient housing for disaster mitigation and others — the biggest challenge seemed to be land acquisition. Particularly for countries in South Asia and East Africa, this is a major concern. In Africa, the land is typically owned by the tribe but in India individually-owned private plots of land in rural and urban areas are coming in the way of development projects. They need to be acquired by the government. Public land already owned by the government is not enough, or it is interspersed with private ones, while modern infrastructure needs continuous stretches. Acquisition means something to be possessed or owned. Acquisition of land implies that private owners sell the land to the government at a price mutually agreed on and then the ownership of that piece is transferred and this transaction is complete, with no dispute later. The need to transfer ownership is felt because the asset created because of the project has a long lifespan. Essentially, the issue is viewed through a conventional economic lens — fair price based on current value of an infinitely lived assets and so on.

But while doing several research projects, when I talked to land owners, the reasons given by them were very different. Owners are not willing to sell for sentimental reasons — considering land as “mother earth”; the fear of being cheated — “these thugs will steal from me”; or the money drying up — “I will have to give the money to my relatives if they ask for their needs”. Selling land appears to be a cultural taboo. These are non-economic reasons given by owners for not wanting to sell land.

What if land is not acquired but borrowed by the government? The idea is simple. The government needs land for a project that benefits the owner and his community but the owner is not willing to sell it for whatever reasons. So, the government borrows it for a particular purpose — a specific project — uses it for that project and returns it to the owner after it is no longer used for the purpose for which it was borrowed. The state borrows land from the owner under certain conditions. 

First, when the assigned use by the state ends, temporarily or permanently, it is returned to the owner, who is then free to use it the way he chooses. Second, the owner continues to use that part of the land till it is required for the purpose it is intended for, say a road or bridge or a power plant. Third, only that much piece of the land is lent that is required for the project and the owner continues to use the rest. Till the project is created on it and after it is complete, the remaining part is used by owner the way he wishes, including renting out. Finally, when the financial life of a project (typically 20 years) ends, the lease is renewed or re-negotiated.

In effect, the land is borrowed not bought, for which a fee is paid, and taken from the owner only as much as is needed right then. If the land is not used or when the project life is complete, it is returned to the owner, to do with it as he chooses. 

Has this idea ever worked in practice? Yes, in the State of Hyderabad historically and till date. Being a land-locked state with one river, the State of Hyderabad did not have enough water for irrigation. Bunds or low walls were built by the then Nizam and his zamindars and ministers, along the river and streams of the river, to save water in tanks. This happened over a period of two centuries between 1724 and 1947. The Nizam of the State of Hyderabad “borrowed” private land for a specific purpose and under predefined conditions. The land continued to be owned by the land owners and they had papers to prove it. But since they had agreed to lend the land to the Nizam for creating the tanks, their lands submerged seasonally, as they were used for storing water during monsoons. There are records of 370 large tanks, 11,015 kuntas or ponds and 1,347 channels in the State. These are not very large-sized tanks, hence, no count is kept in the government records, but they are many and ran into over 500-plus in the metropolitan area alone in 1901. 

A complete record is not available for the capital outlay for many of these tanks, along with irrigation channels that were constructed by former ministers, or minor tanks that were the works of the zamindars till 1901. But, we know they were not exempt from agricultural revenues, thus receiving no special treatment for letting the Nizam use their lands. While the tanks lasted, this system worked to everyone’s advantage. However, after Hyderabad became a state capital, it urbanised rapidly. The tanks dried up or just vanished as the city grew. The pieces of land were reclaimed by the owners and the judiciary respected their property rights.

Will it work today? Perhaps it is time to consider a similar model.

The writer is UGC professor, anthropology department, at the University of Hyderabad